Amazon Developing Larger Kindle Fire Tablets

Rumours have surfaced that Amazon is already working on larger versions of its recently released tablet device, the Kindle Fire.

According to the Taiwanese publication DigiTimes, the online retailer is working on 8.9- and 10.1-inch models.

“Amazon is developing 8.9- and 10.1-inch next-generation Kindle Fire models, and has selected an 8.9-inch model for launch by the end of the second quarter of 2012,” reads the 21 November DigiTimes piece, which cited unnamed sources. It also suggested that Foxconn had become “a second original design manufacturer (ODM) of 7-inch Kindle Fire next to Quanta Computer.”

Vending Machine

The Kindle Fire is not a tablet in the mode of Apple’s iPad or Samsung’s Galaxy Tab, whose user interfaces centre on grid-like screens of individual applications. Amazon’s stated goal has been to build a device that seamlessly connects with its voluminous stores of streaming video content, e-books and music.

To that end, the Kindle Fire’s user interface consists of a set of virtual “shelves” lined with the user’s media and applications, as well as touchable links to Amazon’s storefront. In many ways, that makes it more of a vending machine for streaming media than a full-fledged tablet.

As a piece of hardware, the current 7-inch Kindle Fire costs $201.70 (£129) to manufacture, according to a recent preliminary finding by IHS Teardown Analysis Service. Given the Fire’s price point of $199 (if that analysis proves correct), then Amazon sells each unit at a slight but noticeable loss.

Business Model

“Amazon makes its money not on Kindle hardware, but on the paid content and other products it plans to sell the consumer through the Kindle,” Andrew Rassweiler, senior director of IHS’ teardown services, wrote in a 18 November research note.

“This is a similar business model to wireless companies such as AT&T or Verizon,” he added. “They sell you a phone that costs them $400 (£255) to $600 (£383) or more to make for a price of only $200 (£128). However, they expect to more than make up for that loss with a two-year service contract.”

The screen is one of the most expensive components of the current Kindle Fire, costing an IHS-estimated $87 (£55), or 46.9 percent of its total bill of materials.

If Amazon decides to build future Kindle Fire devices with larger screens and upgraded hardware, it could cost the company quite a bit more – but then, the retailer would probably set a price for those tablets above its current level.